At the outset I would like to congratulate HMG and in particular the National Planning Commission on the highly participatory approach that has been adopted in designing the Interim PRSP which will serve at the same time as concept paper for the 10th Five Year Plan. It is very significant that the PRSP and the 10th Plan will be one and the same document. I cannot think of a stronger indication of Government ownership of this document. It sets also an example for other countries showing a way a way to reduce duplication and waste through pulling these two critically important documents together into one.

While the process of preparing the concept paper has been important, it is probably fair to say that the most important phase of strategy and plan formulation lies still ahead of us. I would therefore like to take this opportunity to offer some comments and proposals which are not meant as criticism of the concept paper but rather as pointers for the main PRSP which will of course be more thorough and comprehensive than the Interim PRSP. At the same time it will be important to avoid the pattern of the 9th Plan which tried to cover all sectors and issues in a comprehensive manner lacking therefore priorities and focus. The Medium-Term Expenditure Plan will also be helpful in bringing public action into sharper focus.

I believe we can all agree that a comprehensive understanding of poverty and its determinants has to be the point of departure. Understanding who and where the poor are and what prevents them from coming out of poverty is at the core of an effective strategy. Poverty is a multidimensional phenomenon extending from low levels of income to poor health and lack of education and to other non-material dimensions of well-being including gender gaps, insecurity, powerlessness and social exclusion.

Earlier versions of the concept paper contained a much deeper and more thorough analysis of poverty in Nepal including the all-pervasive issues of inequality and discrimination. I would submit that unless these are recognized and addressed up-front only limited progress can be achieved in the reduction of poverty. It is significant that the Right Honorable Prime Minister has recognized these issues in many statements and announced a number of measures to deal with them. It is also fair to say that the current conflict is not only directly linked to poverty but also to inequality and discrimination. Tracking trends in inequality reveals a disquieting picture that needs to be squarely addressed if social peace is to be restored.

Setting and monitoring outcome indicators must be an integral part of the Strategy and Plan. Choosing the Millenium Development Goals adopted by the Heads of State and Government of all countries represented here could be a point of departure. This would also be a powerful way to enhance the compact entered into in September 2000 in New York. After all the international community has committed itself to jointly realize these targets. An important prerequisite is, of course that each side lives up to its part of the bargain. This then leads me to the key elements of the strategy:

There is now an international consensus that empowerment has to be the center of any successful poverty reduction strategy, empowerment of women and men - to ensure their participation in decisions that affect their lives and enable them to build their strengths and assets.

Poor people and poor communities rely primarily on their own energy, creativity and assets. Such assets are not just economic. They are also social, political, environmental and personal - both for women and for men.

Already the Independent South Asian Commission for Poverty Alleviation pointed out in their report of 1992 that "the poor are rich" in South Asia, not only in their ability to survive against insurmountable odds but also in their ability to contribute to growth through their creativity and strength. In Nepal there exist already thousands of community organizations, groups of women and men who haven taken their fate into their own hands and reduced their poverty in measurable ways through savings and loans, building jointly physical infrastructure, like irrigation systems, initiating micro enterprises, benefiting from training and providing services against payment in their communities. Unleashing these creative forces through systematic social mobilization throughout the country would represent one of the most important steps the government could take to reduce poverty in the country. Supporting policy measures would include the establishment of genuinely decentralized social services held accountable to local communities and effective systems for credit in rural areas. Allow me to remind you in this context of the fact that over 60% of all rural households are chronically indebted to moneylenders who charge exorbitant interest rates. Evidence suggests that social mobilization can result in a dramatic reduction of interest rates and drive moneylenders out of business.

In the context of empowerment policy reforms and actions are also necessary to enable poor people to gain access to assets that make them less vulnerable. Security of tenure for housing and land playa critical role in this context.

Gender equality is absolutely essential for empowering women - and for eradicating poverty. Already in Nepal women are on the front line of household and community efforts to escape poverty and cope with its impact. However more often than not they do not have a voice in decision making - in the household, in the community or in national and international arenas.

Gender equality needs to be a the center of Nepal's strategy for eradicating poverty, both as an end and as a means to eradicating all forms of human poverty.

This means:Focusing clearly on ending discrimination against girls in all aspects of health, education and upbringing.

Taking more action to end violence against women, the all-too-pervasive hidden side of human poverty.

A creative commitment to gender equality will strengthen every area of action to reduce poverty -because women can bring new energy, new insights and a new basis for organization. Sustained poverty reduction requires pro-poor growth not just broad growth. There is still a danger to be mesmerized by the quantity of growth. Unfortunately growth during the 9th fiveyear plan took place primarily in urban areas and the service sector enhancing already existing severe inequalities. Much more attention needs to be paid to the structure and quality of growth ensuring that it contributes to human development, poverty reduction and long-term sustainability. Unless the government takes timely corrective action much of the economic growth in Nepal will continue to be lopsided and flawed: growth that is jobless, voiceless, rootless and future less.

The quality of governance has a direct effect on economic growth, the effectiveness of basic services, the safety and security of citizens, and equity in the distribution of benefits. Many undesirable outcomes such as corruption, high transaction cost and malfunctioning public sector institutions are the result of flawed governance arrangements. Realizing the good governance related commitments of the Reform Agenda should therefore occupy highest priority with special emphasis on decentralizing the delivery of basic social services. It is most heartening that both the Right Honorable Prime Minister and the Honorable Minister of Finance mentioned this point prominently in their statement yesterday at the opening of the Nepal Development Forum.

The lack of an appropriate monitoring system has blunted national efforts to reduce poverty and promote human development. Monitoring efforts have been sporadic and ad hoc.

Moreover, the lack of coherent and uniform monitoring tools has made it difficult to track progress over time. Excessive emphasis on quantitative approaches has crowded out real understanding of the dynamics and issues u underlying poverty and the ways in which the exclusion of women and disadvantaged groups from mainstream development exacerbates poverty.

The UN system is already working closely with the government on the establishment of a comprehensive poverty monitoring system. Tracking progress in the realization of the Millenium Development Goals will be one element of the system.